[Matt_ArnoldParticipant@matt_arnoldJoin Date: 2006Post Count: 142]

January 16, 2014 - 5:35 am

Hi Matt

The concept of a I/O loan with an offset account gets thrown around a lot on this forum as the ideal set up.

And, in most scenarios…  it is !

As others have highlighted the benefits and how the structure works, i won't re-hash that…   what i will say but, is it all falls over is if you are not totally committed and disciplined in your savings…

Eg.  If you have 50K savings in your offset account after 5 years and you figure, 'hey, we are doing ok, let's go on that overseas holiday and blow 10K', you reduce your offset to 40K.   The next year, the offset account gets back to the glass ceiling of 50K and you figure 'hey, we are doing ok, let's upgrade the car to a nice, new, shiny one' once again reducing the offset to 40k. The next year, your back to the glass ceiling of 50K and you figure 'hey, let's spend 10K on a new house furniture package'….    

You can see the trap ?    After X number of years, you still have the same principle owing, and only have 50K in the bank, whereas paying P&I would have forced you to save the money that you'd spent on 'stuff over time'.

Matt

[Matt_ArnoldParticipant@matt_arnoldJoin Date: 2006Post Count: 142]

January 7, 2014 - 12:38 am

Hi Matt

That sounds like a great plan…  it's also how i got started with property

Not sure if your still single, but renting a room to a mate will very quickly add to your savings.

When you do buy the property, just try to keep in mind that it is only a stepping stone for you, and ultimately it will become an investment and as such, buy something that will be a good rental – Eg. Close to train / transport, schools, shops etc

Cheers

[Matt_ArnoldParticipant@matt_arnoldJoin Date: 2006Post Count: 142]

January 5, 2014 - 9:45 pm

Hello Mate

PM Sent

[Matt_ArnoldParticipant@matt_arnoldJoin Date: 2006Post Count: 142]

December 30, 2013 - 8:13 am

Hi Matt

You’ll do well mate

When you talk with a broker, make sure they understand your long term plans as this will have an impact on how they structure things.

Oh, and make sure you ask a heap of questions, and most importantly, you understand the structure they are recommending.

Knowledge is power…

Cheers

Matt

[Matt_ArnoldParticipant@matt_arnoldJoin Date: 2006Post Count: 142]

December 30, 2013 - 1:46 am

Hi Matt

Initially, well done on saving such a significant deposit at your age.

I would defiantly recommend going via a broker. Both Richard and Jamie who have commented above would serve you well.

Have you thought about your long term strategy at all ?

Eg. Are you looking to simply buy one house and pay it off as quick as possible, thus living ‘mortgage free’ or are you looking to build a multiple property portfolio ?

My biggest advice to you, is answer the above question as early as possible, as it will define the choices you make going forward.

Matt

[Matt_ArnoldParticipant@matt_arnoldJoin Date: 2006Post Count: 142]

December 18, 2013 - 6:36 am

Hi Ryan

Having read your article, I just wanted to highlight the following questions you pose. They really are great questions that will very quickly qualify if an investment is worth looking further into

Quote

Ask yourself the following questions when considering purchasing an investment property

1. Will this move me towards my goal in the short term?

2. Will this move me towards my goal in the long term?

3. Will I still be able to continue investing after buying this property, or will this limit future investments?

4. Is this a level of risk I am comfortable taking?

If the answer is no to any of the above questions think twice before moving forward with the property purchase.

End Quote

[Matt_ArnoldParticipant@matt_arnoldJoin Date: 2006Post Count: 142]

November 30, 2013 - 6:32 am

Hi Munmun5

From my understanding 95% of agencies will allow their sales agents to sell each other's listings no questions asked.

The commission split is generally 60% for the listing agent and 40% for the selling agent.

Some will argue that the listing agent won't try as hard to get a sale across the line if it's not their buyer because of the above…

From experience (I did do a brief stint as a RE salesman) most agents don't really focus on buyers, they tend to spend the majority of their time chasing new listings and are happy to wait for a buyer to come through an open home etc…  this approach always baffled me as you need both a vender and a buyer to collect your commission check.

So, general advice, is try to find a salesperson who you think will work hard to get the sale across the line once you make an offer (eg. probably not the type of agent you would list your home for sale with , let them know that you have cash ready to go, and then stay in regular contact. Eg. Call them every Thu and ask what new listings they have etc…

In regards to RE.com / domain etc 95% of agents will list on both. A few small agencies or independents may list on Domain only. From memory RE.com was about $800 per month, where as Domain offers a once off fee per listing for about $90 each listing.

Hope this helps….

[Matt_ArnoldParticipant@matt_arnoldJoin Date: 2006Post Count: 142]

November 16, 2013 - 10:41 pm

Hi Luke.

I know in NSW a tennant can break lease without penalty if they are moving into aged care or community housung. Same for somebody needing to move due to domestic violence issues… not sure if that extends to defense force personnel but.

I doubt that your PM would be willing to make specific reference to the new act if they were not certain.

Maybe I just trust my PM too much. LOL

Matt

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November 6, 2013 - 4:52 am

Hi Ynchai

What are you exactly looking to achieve by paying your house off in full ?

If you are looking to have the house paid off in full so that you can move in to it, put your feet up and relax living life without a mortgage then Dave Ramsey has some really good ideas on debt cancelation etc   (www.daveramsey.com).  

Please note, he is American based so although his ideas for debt cancelation will work in almost any market, his advice around investing etc is very much based on an American tax system.

Having said that, if you are looking to build a multi-property investment portfolio and are comfortable having debt, then read Robert Kiyosaki's 'Rich Dad, Poor Dad' and start to educate yourself about all things related to property investing. Simply put, if you want multiple properties, doing everything you can to pay off the loan related to your current investment property, as already outlined by several people above, isn't the best approach to take….

[Matt_ArnoldParticipant@matt_arnoldJoin Date: 2006Post Count: 142]

November 3, 2013 - 8:02 am

Hi Melissa

To answer your question;

Pros

Increased voting power at AGM

Less effort involved to stay across portfolio (eg. you only need to be a part of 1 strata executive etc)

Cons

Should a special levies be required, your responsible for two portions

Should you need to sell both units quickly, having two identical units for sale in the same block at the same time would greatly reduce the 'perceived value' of both units.

…

If I can add, although I understand that having a investment that is positively geared from purchase can be very attractive, considering that you really haven't had any capital growth in the 7 years that you have owned your current unit, and the current owner of the 2nd unit is having a hard time selling, I'd be fairly hesitant to take this one on…

Matt

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March 20, 2013 - 6:17 am

I'd be asking a few more questions, yeah…

The plumber who did the job – what report / reason for the blockage did he provide ?

[Matt_ArnoldParticipant@matt_arnoldJoin Date: 2006Post Count: 142]

March 20, 2013 - 5:18 am

Hi fingerscrossed

Its a grey area…

Did the toilet block because the tenant was intentionally trying to flush nappies or did it block because of old pipes / poor pressure etc ?

Matt

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March 19, 2013 - 4:12 am

Hi icecric

Might be an idea to confirm your intentions with your PM as well.

If your property is either a studio / 1 bedroom you may achieve higher rent.

If the property is a 2 Bedroom +, having it fully furnished can detract from your property.

Eg. If you already own your own furniture, would you pay extra to live in a property where you couldn't use your own furniture ?  To take it one step further, where you then have to pay again to store your own furniture for the duration of your tenancy…

 

Matt

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March 15, 2013 - 5:37 am

A little of topic, but worth considering when working with tenants to schedule the sales process. In NSW, with the last major changes to the act, your tenants can simply up and walk if you decide to put the property on the market…

Residential Tenancies Act 2010 No 42

100 Early termination without compensation to landlord

(1) A tenant may give a termination notice for a fixed term agreement on any of the following grounds:

© that the landlord has notified the tenant of the landlord’s intention to sell the residential premises and did not disclose the proposed sale before entering into the residential tenancy agreement,

[Matt_ArnoldParticipant@matt_arnoldJoin Date: 2006Post Count: 142]

March 15, 2013 - 5:10 am

Hi Dennis

Yeah, there is two sides to every story.

First thing that comes to mind is that although time frames differ in each state, you can’t just ‘put the rent up’ without providing sufficient notice…

In regards to the current PM, in the same way that property values fluctuate, so do does rental values.

As mentioned previously, you can put the rent up by whatever amount you desire but you run the following risks;

1) The tenant moves out and then you have to re-let the property (vacancy period + re-letting fees if applicable)

2) If tenant does move out and your property is in fact ‘above market’ rent, the above mentioned vacancy period can become very long and expensive, and you may end up lowering it to below what you originally had it rented for in order to get a tennant. (Yes, i have seen this happen ! )

3) Tennant takes you to the tribunal and proves that the rental increase is not justified, and tribunal cancels your request and you have effectively destroyed your relationship with both the tenant and your managing agent.

Having said that, if an $80 p/week increase is justified – that's $4K per year your entitled to…  that'll change the numbers a heck of a lot !

One final thing if i can say;

(Sorry, but one of my real bug bears is the number of investors I talk to who either struggle with / or have been completely turned off property investing because of a poor PM experience)

My PM is my advisor, who is at least certified if not licensed in order to act in that position. 

I should not have to follow them up about a rental increase, routine maintenance or be asked the question ‘What do you think / want to do ?’

They should proactively follow me up at all times about all things that relate to the property, and ‘advise me’ on what action I should be taking.

If the lease is coming to an end, they should ‘advise me’ on wether or not a rental increase is applicable, not ask me ‘what do I think ?’

Yes, as an investor I have a responsibility to oversee my investments, and the final decision remains mine to make but there is a very good reason why I pay (above market pricing ) for the PM I have.

[Matt_ArnoldParticipant@matt_arnoldJoin Date: 2006Post Count: 142]

February 16, 2012 - 10:19 am

kateej03 wrote:

Hi,

I'm about to put an offer on a house that has great rental returns, my question is can you have the offer subject to the tenants staying on once the house is sold, or is the lease the tenants have signed valid for new owners? It's probably unlikely the tenants will move out but just in case.

Thanks,

Kate

Hi Kate

What state are you in ??

In NSW, the lease remains in place despite a change of ownership.

Having said that, the laws were relaxed a lot last year in the favour of the tennant. The new laws basically allow the tennants to break the lease with a 6 week break fee penalty in the first half the lease, and a 4 week break fee in the second half of the lease.

Also – are the tennants on a fixed term lease, or are they on a expired lease – once again this has implications.

I would be pretty hesitant buying any property where the numbers only work based on a tennant paying above market rent…

Matt

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March 26, 2011 - 3:17 am

Hi Scott

I can keep you updated on what is happening here on the Central Coast as far as off the plan developments go.

Give me a buzz if your interested and we can talk further about specifically what you are after…

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March 26, 2011 - 2:44 am

Hello Folks

From a rental perspective, Granny Flats are great for the elderly in-laws, adult child or a rental if you are living in the main residence.  

if you plan on renting out both the Granny Flat and the Main Residence later down the track you will have difficulties…

From experience, where you have a granny flat on the same title with shared power / gas bills, no formal fence seperation etc, a lot of quality tennants are really hesitant.

Eg. If you were a family with a couple young kids (with a good rental history – the type of tennant you actually would like to rent to !) would you really want to rent a property which has a granny flat in the back yard, which is most likely going to be rented by a young single guy – who you have never met & have no real influence over wether he stays or goes, or who he is replaced with if he does move on ?

Cheers

[Matt_ArnoldParticipant@matt_arnoldJoin Date: 2006Post Count: 142]

March 25, 2011 - 2:14 am

If the property is a good purchase (Eg. Cost, Location, Structural Condition, Actual Market Rental Return etc) i would still chase it, but only with the condition of vacant / delayed settlement.

Cheers

[Matt_ArnoldParticipant@matt_arnoldJoin Date: 2006Post Count: 142]

March 25, 2011 - 1:08 am

Hi Nonnie

It is a common practice for tennants with a bad rental history to offer above market rent in order to secure a rental property.

Please don't let this fool you…     An extra $20 – $30 per week ($1000 – $1500 per year) is very little compensation for the effort involved when dealing with a tennant who is constanly behind in rent, causing damage to your property etc.

 
In regards to the current situation, if you did want the tennant out prior to settlement you could offer a delayed settlement until July.

Alternatively, buying the property with the current lease in place is really just a calculated risk….   Eg, How much more damage will the current tennant cause prior to leaving.